Community

In his book "The Big Short", Michael Lewis says that rating agencies are filled with people who tried but couldn't get into mainstream Wall Street firms, and therefore that it was very easy for these bankers to game the rating agencies. Two years ago, in a post titled "Credit Rating Agencies & The Financial Meltdown" in my personal blog, I'd written, "In this subprime mortgage caused financial meltdown, public opinion accuses some players of abject greed and others of downright fraud. But incompetence is a charge perhaps reserved only for credit rating agencies." Recent incidents seem to reinforce this point. 

I've read somewhere that CRAs came into existence when government bond issuers wanted to outsource their obligation towards assuring asset quality. Given that background, it'd be interesting to see your prediction "Soon companies in the credit rating business will be regulated" coming true - it'd amount to a sort of "reverse outsourcing"!

Kudos to Barclays for using innovative Web 2.0 and social media technologies to foster community innovation. Unfortunately, as thestake admits, the number of stakeholders is not displaying correctly. Hope the organizers fix this problem ASAP for it has a strong influence on the level of engagement this competition can spur. 

I really enjoy these calls from one of my banks. Everytime I log a complaint or query using the secure email feature on their Internet Banking website, they somehow choose to call me instead of simply replying to my email, and ask me to verify my identity! I turn the table around on them and ask them to verify their identity. At first, the CSR gets dazed with my demand but eventually they get my point. When they correctly read the first few lines from my email, I'm sure they're who they claim to be viz. my bank. 

Their proprietary nature and their vendor lock-in are strong downsides of PaaS platforms in themselves. But, when they come together, as they did when Google App Engine hiked rates 10-100X earlier this year, they tend to cripple or shutter down many apps built over them. More details can be found in the below article from InformationWeek.

http://www.informationweek.com/news/cloud-computing/platform/231600672

Of course, the half-full view would be, these apps at least lasted a few months / years under the previous GAE price regime, and without GAE, they might never have seen the light of the day. 

@Pat C: Thank you for taking your time out to elaborate. It is truly enlightening to know that PCL and Voice Biometrics have made such great strides in the recent past.

I'm not surprised with this trend: After all, retail banking doesn't offer banks the chance to "privatize their gains and socialize their losses" the way investment banking does!

I agree with all your suggestions on how to minimize cash use. However, I'm not so sure that cash use has to be minimized beyond the levels chosen by consumers.

As I'd pointed out in a recent Finextra blog post, e-payments still have too much friction to become viable alternatives to cash and other traditional forms of B2C and C2C retail payments involving the common man. Cash handling certainly has costs but so does finding and using account number, sort code and other information required to put through ePayments. In fact, before making any ePayment, I do a sub-dollar test transaction to "pipe-clean" the process, thus making me do lot more work as compared to checks or cash. While things may change going forward, at this point, I'd be happy to pay for cash usage than spend my time to ensure that my ePayments are executed correctly. And, by the way, if the cost situation is really so much in favor of ePayments, I'm curious to know why banks charge for ePayments but not for checks.  

https://www.finextra.com/blogs/fullblog.aspx?blogid=5970

I haven't read the Aite Group report but perhaps it ranks behavior analysis at #1 position also on the basis of its applicability for both card present and card not present transactions.

As far as I can make out, correlation analysis won't work in the CNP scenario. Even in the CP scenario cited for its usage, I see two challenges: (a) Not all ATM users - perhaps not even a majority of them - will have smartphones that have GPS or other forms of geolocation functionality (b) GPSs in most entry-level smartphones don't work - or take too long to track location - inside buildings and closed spaces, so proximity correlation might take several seconds, if not a couple of minutes, to return a go/nogo decision when the ATM is located indoors.

As for voice biometrics, it's been around for long and has traditionally suffered from false-positives in the event of the customer having a bad throat. Not sure if the technology has improved substantially in the meanwhile to merit an entry into the mainstream. Also not sure how it can be used for web-based authentication. 

Did you really mean to say "Is lack of consumer education a barrier to banking innovation?" in the title?

I believe that rapid spitfire reactions by trigger-happy regulators is a far bigger barrier to mainstream adoption of banking innovation. Take the case of IVR and mobile channels. Responding to higher perceived risk of payments made via these two channels, India's banking regulator has been quick on the draw to mandate OTP and two-factor authentication for them. The ensuing escalation in transaction friction has been so high that many people have virtually written off these two channels for making payments.

Privacy is what I'd term "dishygeine factor" - the exact opposite of 'no big deal if you have it but a big deal if you don't have it'. Much as privacy advocates make it out to be a redline issue, privacy seems to be like many other things that simply have a price on them. As Mint, Offermatic and many others have shown, if you lure them with strong enough incentives (like money-saving offers in this case), you can manage to get a lot of people to reveal almost anything about themselves (such as username and password to their bank accounts).